WINNIPEG, Manitoba--Despite farmer selling there remained little doubt that the canola market was bearish during the week ended Jan. 31, according to analyst Jerry Klassen of Resilient Commodity Analysis in Winnipeg.

"I think there's a feeling in the country that some farmers are throwing in the towel. There's still a bearish outlook for canola in the longer term," he stated, suggesting growers were taking whatever they can get for their canola. He called it "emotional selling."

Trading volumes surged to more than 60,000 contracts on Jan. 30 and 31, which Klassen said was a combination of that farmer selling plus the speculative funds selling as well while the commercial buyers made some limited purchases.

"When you have high volumes like that, it confirms the price structure. Sometimes we are getting to [price] lows where the markets are due for a balance.

Klassen said to keep a close eye on the upcoming stocks as of the Dec. 31 report from Statistics Canada to be released Feb. 8.

"That stocks report is going to be very important this year. I think it's going to show us that the farmer has not sold a lot of canola," he said.

The Canadian Grain Commission reported producer deliveries of canola were 7.8 million tonnes as of Jan. 21. That was down from 9.6 million tonnes the same time last year.

"There are ideas that those stock reports are important because it confirms that production number. If the stocks [next week] come out a bit higher than we are anticipating, that crop was better than what StatCan had on their November survey," Klassen continued.

StatCan pegged the 2023/24 canola harvest at 18.3 million tonnes, which was an improvement over previous estimates that crop was going to be smaller due to dryness in the early summer.

Klassen also noted canola's March/May spread was getting wider. "That tells us the end users are pretty well covered for their nearby requirements," he said. "The market is telling you, 'We don't need your canola right now. Please store it and sell it to us in June-July.'"

Klassen noted recent dryness in Argentina and a much smaller than expected soybean harvest in Brazil has provided some support to the Chicago soy complex and to ICE canola futures.

But he said the large soybean harvest overall coming out of South America will put pressure on North American oilseeds, especially the products.

"The oil complex and the meal complex really have a bearish outlook going into summer," he commented.

With early estimates of more U.S. soybean and Canadian canola acres to be seeded this spring, Klassen said that could eliminate the usual rally in the oilseeds in March and April.

"But it looks like with the larger acreage the market will have a bit of more of a cushion if yields are below average," he noted.


Source: Commodity News Service Canada, news@marketsfarm.com


(END) Dow Jones Newswires

01-31-24 1700ET